tv [untitled] November 18, 2011 7:00pm-7:30pm PST
, asset managers be responsible for some of the areas that were questions in our charter like state of good repair, what the delivery method is. would we design or build with the contract manager or so on? and measuring performance against baseline budgets, putting more time into the front end, which is item b. and making sure the project manager has cradled the grave responsibility for projects. that is all we're an estimate is required. -- that is where an estimate is required. we have talked along the lines of the improvement of board reporting.
in an appendix 5, there are examples of various metrics that can be used in that type of reporting. they would provide a portfolio look so that they can look at overall howled the collective management of the portfolio is performing. right now each project is reported individually. >> the task of eliminating the confusing financial information will be a difficult one, because the information is communicated from many different sources within the mta. nevertheless, it would be possible to do a better job than
it is being done at the moment, particularly at a higher level when the executive director makes comments about cost and time and so on. >> [inaudible] life is anything but normal. i>> we think a special effort should be put into improving processes, and a single organizational units should be made possible. there is adequate resources made to improving the use of information technology. for such a large agency, it has a very small i t stuft.t. staff. they're not providing the communications development that they need. another theory, which is
critical, is one of the cpsccs integrating to avoid duplication of effort, and the project operations manual needs to be improved to reflect all of these changes, and also to talk of the i mtiming of information. old information is generally not useful in managing projects. finally, our recommendations are that management of the improvement projects themselves needs to be sharpened. we believe the cpcs is slipping, and ultimately will take longer than originally
estimated. we also think there are areas that need attention, and finally come out we have also set out principles for the design and implementation, which need to be adhered to to see you do get value from the system. >> any questions or comments? supervisor mirkarimi: i very much appreciate the detailed information you have. this is the first time that this information is being presented to the transportation authority, and i think there were so many useful nuggets of this information that the time that it might take to really appreciate some of this information may not be afforded
perhaps in this body, so i will suggest to this chair of plans and programs that this not be the last conversation based on the details that are being presented today, and that this be carried over into committee, but i know it was important for all of us to hear this at first swoop, based on what has been presented, especially with the new director of mta and chief executive director that is also present. i also want to highlight that as supervisor, supervisor campos remarked that this is the first time and audit had been funded, for the most part, by the transportation authority as a way to help foster a level of interconnection between ta and mta. and earlier in the time when this was introduced as an idea to members of the mta, especially members that are no longer with the mta, this was
not well received, and i believe that was a mistake or misperception, because i think with this level of interconnection, the ultimate goal is to a line agencies as best as possible to help each other, especially when the mta so richly deserves it. i appreciate the information being presented today, but if people feel a slight pinch of thyme, i do not want that to get in the way of a conversation not being pursued in plans and programs and offline. supervisor campos: thank you. 'there is there is a lot of matl in substance here, and the reason we wanted to bring this presentation is because the level of importance of this matter. we wanted to make sure that the entire board heard directly on what the findings and
recommendations were, with the understanding that a lot more work needs to be done and a lot of the work needs to be done in committee, but it was important for us that every member of the board heard this. i just have a couple of follow- up questions, if i may. i wanted to say that some of these findings are very disturbing, and one general question that jumps out with respect to the cost overruns and the fact that you looked at 13 projects and 12 of those were above the baseline budget by $87 million, which is about 32% of the estimated cost. how does that compare to what is generally perceived to be of best practice? how does that compare to what would be expected in this kind of operation? >> well, i will take the first
crack. first, the procedure is to do 35% engineering of the project. these are not the initial capital improvement project estimates. these have some rigor behind them. there is also then a contingency, which i think by practice is 30%, that is our understanding. you have another question. given those things, we think it is certainly a poor performance. supervisor campos: in light of the poor performance, i do not understand how it is in terms of oversight that the board of directors provide, that when all of these projects came before the board there was at traffic,
a green traffic lights if you will that made it sound or look like everything was going according to plan or in order when most of these projects or many were not only behind, but also were above the initial cost estimate. and in terms of the level of oversight that the board provided, how does that compare to what is best practice? >> if the term used was on track -- the term used was on track. that is the approved budget, not the baseline budget. it is the baseline budget that should be kept. the base line figures are in the reports, but they are overshadowed by the traffic light. if they are going to do a traffic light, then they ought
to do it with criteria based on the baseline, not the approved. supervisor campos: just a final question, and we look forward to having this discussion more in depth and the committee, but in terms of the number of days that some of these projects are delayed, a key construction projects are on average 475 days behind schedule -- how does that compare to what is happening elsewhere in other agencies in this industry? >> well, clients and other agencies that have used the practices that are recommended throughout the report, particularly on page 7 will have fewer overruns, and maybe less of a need for that level of
contingency. in other words, they may be able to define the project will be enough so they can do it for a 15% contingency rather than 30%. supervisor campos: related to that, you noticed there was no -- noted there was no risk analysis. is that typical as well? >> the project operations manual calls for risk analysis when there are risks there. in practice there are few, if any, risk analysis done on smaller projects. when in fact there is evidence by the overruns in bleakness, there are risks involved in the project. commissioner chiu: thank you.
i want to thank commissioner campos and others for recommending we undergo this process. i do not want to be labor any additional points. and i think the broad point i would like to make, and i think i like to hear mr. ruskin's comments on this is from my perspective, project management city-wide does not really seem to exist as a discipline. i recently as for a budget analyst report that showed half of the major contracts in the city in recent years have seen change orders that did not go through scrutiny here at the board, that resulted in hundreds of millions of dollars in cost overruns. what we see here is part and parcel of that. it seems not only do not have procedures in place to hold accountability on what we say we're going to spend on a particular project and when you're born to get it done, but there does not seem to be a counter of accountability -- a
culture of accountability. i think there is a broader discussion we need to have city- wide about how we really and truly tackle this such that when we say something is going to cost a certain amount of money and be done by a certain date, it gets done. we're not born to solve that here. part of what i am looking for from the audit team is the specific best practices and how this gets done in other places, because i am not convinced we have good solutions with in city government here in san francisco. -- we're not going to solve that here. supervisor campos: if we want to get the opportunity for the director of transportation to come forward. i want to thank mr. reiskin and his staff. the mta has worked very closely
with all audit team, and we appreciate the openness. with that i will turn it over to mr. wristband here yet i think the timing works pretty well because it is just taking over this agency. -- i will turn it over to mr. reiskin. >> thank you. good afternoon. thank you for giving us the opportunity to be here, and think yoank you, commissioner c, for your leadership and coming this process in place. and i would echo your sentiments us the new guy to walk through the door and handed me documentation for how to improve, it is a great thing. i would be lying if i say in departments we love when folks come in and audit us.
often the result can be very helpful, and i think that was the case here. i first day on the job i sat down and one of the things we discussed was the important of mta's ability to deliver project on time and on budget. -- my first day on the job i sat down and one of the things we discussed was the importance of mta's ability to deliver projects on time and on budget. i came into this job not being an expert in transit or transportation, but with significant and it relevant experience in delivery of capital projects and managing a capital program, and it was a very strong focus of mine to do exactly what commissioner chiu
is talking about, which is to bring a culture of accountability to the capital projects, and i had the pleasure of joining many of you at various groundbreakings and ribbon cuttings over the years, and i think we have moved up the ball significantly forward as a city in terms of how we deliver capital projects, and i would argue the success at the ballot a week ago today is to some extent a manifestation of the public's confidence in the ability to deliver what we say we're going to do. it was not that long ago that was not the case, and i think maybe some of what this all that has expose is what was all in the rest of the city not long ago where we would come in with a concept, perhaps not as well defined as it should have been come and put out some numbers in
terms of cost, schedule, and we would significantly blow through those. under the leadership of current boards and mayor's we have really shifted to investing much more in free development work, so that we can better understand what our cost of schedules will be. i think that is part of the essence of what we're talking about here. i worked hard at dpw to put systems in place, just as the mta is in the process of doing now to help support the professional inconsistent management delivery of capital projects, as well as documented all of the procedures, which the mta has already done in terms of how capital projects are delivered, so i think we would probably characterize some of the findings differently, and
some of what are considered to be cost overruns are really an issue of the point in time in which the budget is set. the recommendations contained from this audit are good ones, and we're grateful for them, and i would be happy to discuss further at the plant in program committee. i do have a whole presentation that if you want i can walk through the highlights of, or if you would rather defer that for the committee, we can do that as well and can just take questions at this point. at this point i will pause and see what the will of the body is in terms of proceeding. supervisor mirkarimi: i believe we of questions and comments. supervisor elsbernd: i see in the opening slide that you have agreed or concurred with 17 of
the 19, put you partially concurred with two. can you tell me what the recommendations are that you only partially concur with? >> maybe. i had to refresh my memory. and one of the recommendations was that we organize around as the class's and asset teams. for example, people that are doing rail work, whether way -- whether they are the engineers, inspectors, they are working as a unit so they develop expertise so they have the ability to work together and share information, and there is
consistency as we do real projects as a the example. -- rail projects as an example. one of the things we did was change from an organization where we have the architect in one place, engineers and one place, and construction managers and one place and oriented along of building division and infrastructure division. very much along the lines of organizing and asset management team. one of the differences between the agencies is a much larger and sourced model -- insourced model. the capital programs division within the mta is very small. i think we have a total of five resident engineers who do construction management. for us to break down into
different asset classis would be challenging. we need the flexibility -- we do not have been of engineers, construction managers, project managers where we can take folks and dedicate them to work in a team. we necessarily therefore need to maintain flexibility to have an engineer work one day on a building project and the next day on infrastructure projects. we do not have the luxury of the numbers to organize in a strict asset management way. we are doing that to some extent. shortly before i joined the fleet engineering group was moved in to work more closely with operations with a fleet maintenance folks are. now from project management to engineering to maintenance, they are working somewhat like an asset team. our sustainable streets division, we are doing that somewhat as well.
and we do not have, i do not think, the staffing flexibility to be able to do that across the board. we are, however, looking at somewhat more of a matrixed organization so that we will have at least asset leadership with designated -- designated in our new capital planning process. we will have 16 different glasses of asset management. each one of them has the lead person assigned. some of the benefits we would get from the recommendation we will get from what we're doing. it would be great if we could. and i think we are at least implementing the spirit of the recommendation. the other one, with regard to partial concurrence, was
something along the lines of the amount of time that our project managers spend it doing community outreach with regard to the project. the recommendation was you should use public affairs for that and let the project managers manage the project. usually project managers are much more expensive than community are rich folks, so there is logic in terms of project funding for that. however, it has been my experience that particularly when you were working in the projects in the public right of way, we are very processed-heavy town, and there is a lot of opinions and a lot of festivities that we need to understand from community groups and stakeholders. if the project manager is the person that is one to be held accountable for addressing in meeting and understanding the community needs, i believe it is
important that they make the time available to spend at engaging in go to community needs and understanding with the community concerns are, because of some of the that person will be held accountable and delegate that function to a public relations staff person who was working off of fact sheaf -- of a fact sheet. i think it is an investment of time, even by senior management staff that is worth doing unnecessary. we will certainly look and make sure we are using those high- level staff resources widely, but that is the reason for the partial disagreement. supervisor mirkarimi: any other comments or questions? supervisor campos: i will
make just a general comment, and we look forward to having this conversation more and that in committee. i think one of the things that jumped out was the finding that if you do have a better management, and you assume a capital budget of 150 million for instance, that auditors estimate a savings of 73 5 million-$15 million -- 7.5 million-15 million. you are talking about significant savings that could be achieved if you have the project -- proper management of these projects. that is 150 million, which is smaller than the overall budget in terms of capital expenditures. i think it is important for us, given the amount of money involved in the millions of dollars that could be saved, that we address these issues,
especially as we are faced with the fact that we do need to increase service. the fact that there are additional challenges in terms of what the ridership use are. and before we start talking about increasing fares, i think it is completely appropriate for us to demonstrate to the public that we are doing the most with the money that we do have, and so i think that is one of the big challenges, because we are talking about pretty significant potential savings. >> thank you. a few points on that. the general premise that we need to demonstrate we are managing the agency well, a book on operating side and capital side before we start talking about asking anybody for more money i think is exactly right on.
as a taxpayer, i want to see that from a transportation agency come into the extent we have recommendations here that will help us improve the management of our capital programs, it is all the more impetus for us to implement these as quickly and as well as possible. we estimate our needs to fully get oliver assets into a state of good repair on the order of $500 million per year in terms of capital needs. to the extent we can manage projects better and make the resulting savings available to address more of the deferred and means that we have been building for generations, to make those dollars go for there is absolutely of goal of the agency. i will clarify that when we're talking about fixing the structural operating deficit,
which is what some of what has been playing in the media in the past several days, we are really talking about operations side, and not so much the capital side. it is a different kind of nut to crack. our capital budget is largely funded by the federal government, and what we would be seeking to do with any savings we achieve would be to get more of our assets into a state of good repair. and i guess what i would say as to the numbers in terms of how much could be saved, i will give you one example. the replacement project, which is currently under way, the agency started that as of rail replacement project at that intersection, and some of the initial community meetings when they went out to the neighborhoods got a lot of feedback in terms of non-rail
improvements that would be good compliments to the project. that would achieve better principles in line with the better streets plan and policy that has been approved by the board of supervisors. as a result, the project went from rail replacement to our real replacement pedestrian and bike safety and streets improvement project. that was one of the examples noted where the mta has exceeded the budget. the reason in that case, one major reason is because we added the scope, and we were able to find funds to meet safety issues and community needs. that increase scope are among the dollars are identified as potential savings. there are other examples where we have added scope to projects in response to stakeholder needs or